Swiss regulators are stepping up efforts to halt an exodus of cryptocurrency projects from the country, after two banks in the country’s small but flourishing virtual currency industry shut down recently, according to Reuters.
Over the years Switzerland has cultivated a reputation as one of the more cordial countries for cryptocurrency entities willing to set up shop or conduct ICOs. However, some customers are flocking to offshore rivals Liechtenstein, Gibraltar and the Cayman Islands, which are now more accommodating.
Switzerland has its own “Crypto Valley,” located in the village of Zug. It is currently home to more than 200 virtual currency entities, including many blockchain companies. In recent years, it has become a haven for crypto businesses due to its low taxes and business-friendly laws.
But the Swiss central bank’s reluctance to facilitate easier access to the country’s banking system has become a roadblock.
The SNB is worried that companies that hold ICOs could violate money-laundering laws because some do not conduct anti-money laundering checks on their investors. Officials at top international investment banks echoed these concerns.
Only a small number of Swiss banks have allowed cryptocurrency ventures to do business with them making it difficult for such projects to be domiciled in the country. The number of institutions that are warm to digital currency focused business is also shrinking.
At least two Swiss banks have reportedly withdrawn services to cryptocurrency projects and groups, further reducing the already limited pool of institutions that handle basic, essential services like accepting deposits. This has triggered the exodus that the country is now facing.
Some cryptocurrency entities that want to carry out ICOs have resorted to setting up bank accounts in other territories like Liechtenstein and Gibraltar where they have access to more traditional banking services and are able to easily access their funds.
The Liechtenstein Cryptoassets Exchange is set to launch in Vaduz this August. Its founders are two German entrepreneurs drawn to the country by the planned blockchain law, according to media reports.